Pension Sharing on Divorce

[Wholenewwoman]

Hi all,

I appreciate that it may be difficult to give a definative answer on here, but is anyone able to give some pointers on what to do about equlisation on pensions on divorce?

Is it better to go for equalisation of transfer value now, or equalisation of retirement income at the point of retirement.

We both have a couple of pensions - both of mine are defined benefit final salary schemes, but I am not paying into them anymore as I stopped work 9 years ago.

stbex has 3 all private and is still paying into one (maybe 2) of his.

His current pot is £2k more than mine.

TIA

When comparing 2 different types of schemes it's better to try and equalise incomes. You'll need specialist financial advice. Richard Jacobs in Stoke is a Resolution accredited specialist and charges £900 plus vat for a report. His reports are very good.

But it all depends in how much difference there is in projected incomes. You don't bother with small differences, and the other facts of you case will affect what adjustment if any should be made, like you not working to bring up the children.

Thank you - I will get advice it is a tricky one that I have no knowledge of at all.

Sorry to argue against Collaborate but I would suggest that it is not always best to equalise pensions based on their incomes. But in the majority of cases where there are defined benefit pensions involved it would be positively wrong to equalise based on the scheme/transfer values. There are other options but no one-size-fits-all solutions.

When pensions matters go to divorce courts the requirement is often that a report is prepared by a fully qualified and suitably experienced actuary, as they are considered to have the most appropriate skill set to value complex pension arrangements. Actuaries are also personally responsible to their professional body for the standard and quality of work that they do and have to comply with strict professional guidelines regarding their conduct. It should be possible to obtain an appropriate professional actuarial report for the same sort of amounts quoted here.

In Wholenewwoman?s case it is of concern that there is (only!) £2k difference between the values of the two pension ?pots?. The probability is that if stbex?s are money purchase (defined contribution) pensions, unless they have any special features their fair values will be similar to the quoted transfer values. By contrast, the defined benefit pensions are more likely to be undervalued. The risk therefore is that a professional actuarial pension sharing report could be obtained, which may conclude that her pensions are actually worth more than his and therefore some of hers should be shared in favour of him.

Pensions can be complicated and boring but there is a lot of money to be made writing reports and advising on how to implement pension-sharing orders. These are important considerations when choosing who to turn to for advice.